Bitcoin has, for most of its existence, been a vehicle of asset value transfer as defined by its founder Satoshi Nakamoto in its whitepaper. Many blockchains, led by Ethereum, have innovated to identify use cases for crypto and its ecosystem. Bitcoin hasn’t, until now.
The growth of Ordinals and other associated products have found value for using the Bitcoin blockchain. We cover key trends on the same and how you can leverage this trend.
(Wondering what Ordinals are? Read here.)
1. NFTs on Bitcoin are a reality
NFTs found on Ethereum or Solana are unique tokens which contain a reference pointer to the target file, which is hosted elsewhere. Inscriptions on Bitcoin, on the other hand, actually contain the raw file data, written directly into the Bitcoin blockchain, making them somewhat unique in character.
Ordinals have seen a steady rise in popularity recently, with some even calling it a direct replacement for Ethereum NFTs including the most popular CryptoPunk.
2. Ordinals have led to a spike in Bitcoin transaction fees and block size
The average transaction fees on the Bitcoin blockchain are increasing. BTC started the year with $0.63 as the average transaction fee and grew significantly by 158%, thanks to the increase in inscriptions. It is now near $1.62 (as of 22 Feb 2023).
This also has increased the average Bitcoin block size.
Given that larger blocks need higher computational power and longer time to get verified, we can understand that some miners are unhappy with this development.
3. Ordinals are spurring innovation on Bitcoin
Adding NFTs to Bitcoin will eventually mean that developers find a way to build integrations with other blockchains — leading to an integrated blockchain ecosystem. This is great for the crypto community in general. We have to note that BTC is currently classified as commodity by the US SEC. Innovation on the main blockchain will be beneficial and offset risks of altcoins being termed as security (and avoid higher taxation/scrutiny).
Associated products have developed including .btc addresses
New wallets (Hiro), Growth of Stacks (STX), Ordinals based marketplaces and .btc domains are all growing well as this trend plays out. Developers have also successfully integrated ordinals to Litecoin, which is a copy of Bitcoin.
You, as an investor, can benefit from this trend in multiple ways.
· Invest in the growth of Bitcoin (long term): new innovation will keep the adoption of BTC growing in the future thus aiding its inevitable price growth.
· Transact Ordinal NFTs and .btc domains: just like how NFT marketplace BLUR did an airdrop this month, we anticipate some of the services to airdrop their tokens to early users with good value.
· Identify other growth vehicles like STX and LTC: Stacks is a layer 2 on Bitcoin and has seen good adoption post Ordinals. Its token STX has surged by 150% in the past one week. Litecoin is in a halving year and the narrative of Ordinals may drive LTC price momentum in the short-term.
